Cloud investments are slow to deliver “substantial” benefits to many companies, PwC report finds
Today’s cloud capabilities go far beyond data centres and cost savings. Newer features like artificial intelligence and machine learning platforms are driving companies to the cloud to help them evolve faster. Regardless of where they sit in the organisation, business and technology leaders from across sectors agree that cloud computing tools are critical for a company’s growth.
However, more than half (53 per cent) of companies are not getting “substantial value” from cloud investments, according to research firm PwC’s US Cloud Business Survey. That’s despite the fact that 56 per cent see the cloud as a platform for innovation and growth.
While the cloud helps connect systems, data, devices and emerging technology in ways that can help companies respond more quickly, and has become a rallying point for the C-suite, executives aren’t getting the value they’ve been hoping for. Nearly half (47 per cent) of respondents see the lack of up-skilling as a barrier to cloud value.
This is consistent with the 2020 Forrester report that said, “after a decade of cloud experience, organisations are facing a talent shortage for all cloud-related skills. Although legacy skillsets translate well to new cloud technologies, the cultural leap to evaluate, select, and operate for productivity, system-level efficiency, and workload-specific problem solving is proving to be a challenge.”
There are other barriers standing in the way of successful cloud technology deployments. According to PwC, trust-related considerations, such as the cloud’s impact on customer engagements or regulatory compliance, are considered too late or not all. Only 17 per cent of risk management leaders who responded to the company’s survey said they are involved at the start of the cloud projects. Also, only 52 per cent of CFOs say they are confident they can measure return on investment in the cloud.
As with any business transformation decision, leaders from across the business play a critical role in the cloud. For example, there’s a high degree of shared ownership across the C-suite for cloud investment decisions — 74 per cent of executives are involved in cloud-related talent and up-skilling decisions. While CIOs are the most involved, at 88 percent, PwC said the survey shows the COO “is emerging as a key business transformation and cloud leader across all areas”.
What business outcomes are executives getting after adopting cloud? Topping the list are improved resiliency and agility (34 per cent say their companies pursue this goal), better decision-making (34 per cent), and product and service innovation (33 per cent).
However, when asked whether they had realised substantial value in 12 target areas, only about half of companies had on average.
Why do investments fail to deliver? What can be done about it? Four actions, according to the report, can help close the cloud value gap.
Align on strategy choices and value
The survey reveals disconnects in the C-suite when it comes to defining and quantifying cloud value. Among executives, there’s no dominant definition of value. About a quarter equate it with faster innovation, while slightly fewer measure it in improved resilience or increased revenue. By role, CIOs and board members are most focused on innovation (39 per cent and 23 per cent, respectively), and CFOs and COOs prize improved resilience (25 per cent each).
Also Read: Cloud Adoption Strategies For Enterprises
What companies can do?
- Develop the value story. This requires making specific choices about how cloud will help you differentiate your business — what digital and technology capabilities you’ll develop, the customer problems you will solve, and the role your company plays in industry or other ecosystems. The CFO can play a leadership role here along with the CEO, scripting and sharing the company’s cloud value story, working with other business leaders to zero in on where cloud can best drive strategy and jointly developing an investment thesis.
- Embrace new mental models. Business leaders should commit to rethinking how work is done. That applies to market-facing innovation as well as internal processes. For example, have you modernised your finance approach to technology so that you’re anticipating and optimising spend or are you merely replicating the approach used with on-premises systems?
Get in front of the next digital talent divide
The digital talent divide affects not just tech specialists, but employees and business leaders who have the skills and mindset to thrive in a cloud-empowered world.
The divide is likely to be more pronounced this time because of cloud’s intrinsic ability to accelerate innovation and growth. Many business leaders are beginning to raise concerns here. In the survey, 52 per cent of executives cite lack of tech talent — such as skills in cloud architecture, cybersecurity or DevOps — as a barrier to realising cloud value. For COOs and CIOs, that number is even higher. Likewise, 47 per cent of business leaders worry about their ability to up-skill people in line with the new ways of working that cloud demands.
What companies can do?
- Start or expand digital upskilling for all employees. Continuous learning is needed so that the organisation can continually refine its capabilities and its business model. This starts with digital upskilling for all employees. Your program should address both tech skills and new ways of working and include creating learning pathways.
- Develop programs to cultivate cloud skills. For tech talent, upskilling is especially critical. For example, you can start with cloud training that’s designed to work with a cloud vendor’s certification program. Or consider other ways to develop a learning culture, such as mentorship opportunities where junior talent with strong foundational cloud skills are paired with more experienced IT employees who lack them. At the same time, continue to recruit experienced tech talent.
- Upskill the C-suite. Developing better cloud business understanding among your executive team and board members is also important. This includes a shared understanding of the company’s business goals, how cloud enables them through a new mindset and how value will be measured. This is an area where CIOs often take the lead, working to build the knowledge and confidence of other business leaders.
Start early to address risk and build trust
The survey results found executives view cloud through the lens of “what it can do” for an organisation, as opposed to simply the threats that it may introduce. Notwithstanding, 17 per cent of respondents do define cloud as a security and business risk that needs to be addressed, and 50 per cent see this risk as a significant barrier to realising cloud value. Risk-related issues need to be considered early as companies look to optimise their cloud efforts and lay the foundation to scale.
What companies can do?
- Revisit customer commitments. Consider how moving to the cloud affects your compliance obligations and customer commitments. Build trust in cloud-powered services. Some companies issue trust-based attestation reports that can provide comfort to customers that a new product or service has been thoroughly reviewed and certified by a third party. This is an approach the 32 per cent of executives who say their companies plan to innovate their products and services through cloud over the next three years should consider.
Also Read: 5 Ways Cloud Is Helping Banks Drive Operational Resilience
Advance your ESG goals with cloud
Cloud can be instrumental in accelerating your efforts around environmental, social and governance (ESG) issues, issues that will be pivotal for businesses going forward. As business leaders take a stronger role in addressing issues like climate change and decarbonisation and improving diversity and inclusion, some are considering technology’s role, particularly as it relates to transparency and disclosures.
What companies can do?
- Standardise and automate ESG reporting. This will provide greater transparency within the organisation. Apart from the chief sustainability officer, the CFO is beginning to take a lead role here in establishing credible metrics and reporting more consistently.
- Look at how your CSP advances your green goals. While most companies recognise that moving their data to a third-party cloud service provider (CSP) can help them reduce their carbon footprint, some are also looking at how to incorporate their CSP’s emissions in their carbon reduction strategy. With net zero commitments specifically, companies will look to identify indirect emission sources across their value chain, including from suppliers, both physical and virtual.
- Consider cyber and privacy goals too. A company’s data privacy and cybersecurity might be bolstered through a CSP arrangement. A CSP, for instance, may demonstrate a significant level of investment in these areas compared with what your company may have done in an on-premises data centre.
